This article originally appeared on Fox Business on August 5, 2021.
Democrats are unapologetic about their plans to significantly increase taxes on what they loosely define as "wealth." Senators Chris Van Hollen, D-Md., Cory Booker, D-N.J., Bernie Sanders, I-Vt., Sheldon Whitehouse D-R.I., and Elizabeth Warren, D-Mass., have proposedsuch a tax and President Biden is including it in his American Families Plan to help cover the whopping $1.8 trillion price tag. Deceptively named the Sensible Taxation and Equity Promotion (STEP) Act, it is more aptly known as the "Zombie Tax."
That’s because it comes back to haunt the living who attempt to carry on family businesses following the owner’s death.
Currently, when family members inherit a business the law steps up the asset’s cost basis to its value at the time of the owner’s death. When the heirs sell the asset, the step up limits the gain subject to tax to any increase in value subsequent to the owner’s death.
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